How Outside Spending Shapes American Democracy
62 Pages Posted: 17 Aug 2016 Last revised: 19 May 2017
Date Written: May 18, 2017
We study the political consequences of lifting bans on contributions from corporations and unions to groups engaging in outside spending in elections (independent political advertising). We propose a model of electoral competition in which outside spending changes the salience of candidate-specific attributes relative to party labels. Empirically, we employ a differences-in-differences design using federally mandated changes to state regulations following recent judicial rulings in Citizens United and FEC v. SpeechNow.org. We find strong evidence that removing bans on outside spending increases the electoral success of Republican candidates and leads to more ideologically conservative state legislatures. We do not find evidence of an effect on ideological polarization and targeted public good provision. In line with our theory, the effects we identify vary with the local balance of power between corporate and labor interests.
Keywords: Outside Spending, Citizens United, Interest Groups, Polarization
JEL Classification: D70, D72, D78
Suggested Citation: Suggested Citation